Explaining Canada-U.S. Differences in Annual Hours Worked

Employed Canadians worked an average of 157 hours less per year than employed Americans during 1997-2004. This one month less per year spent on the job is a significant contributor to the difference in GDP per capita between Canada and the United States. This article provides a detailed examination of the factors underlying the Canada-United States gap in annual hours worked. We find that over 40 per cent of the gap can be explained by a higher propensity of Canadians to take full-weeks off, mainly for vacations. Furthermore, over a quarter of the intensity gap is explained by a higher incidence of part-time work in Canada, and much of this reflects the higher proportion of Canada's part-time workers who have difficulties finding full-time work. We find that Canada's higher union coverage rates and labour standards are more important factors to explain the hours gap than differences in marginal tax rates. Canada's less robust economy is also relevant. Finally, we find that highincome Canadians take considerably more weeks of vacation per year than their American counterparts and are less likely to work long work weeks.